The latest data from the ABS showed that the seasonally adjusted unemployment rate rose to 4.5 per cent in April, as the number of employed people fell by 19,000 in April, while the number of unemployed people rose by 33,000.

Actually, the total number of people employed fell for the first time this year, driven by 56,400 fewer people aged 15 to 24 years old working in April. Youth unemployment is now at 11.1 per cent, the highest since October 2021.

This result was a surprise, given that economists had expected employment to grow by about 15,000. It may be evidence that the combined effect of the three consecutive rate rises and the energy shock created by the war in Iran is arriving sooner than expected.

This is the highest level since November 2021, suggesting the labour market is cooling faster than anticipated, and it prompted traders to shade back their expectation for rate rises slightly, with a June rise now less likely. The RBA next meets on June 15-16.

Now, on one hand this was expected, as I discussed yesterday, and the RBA had modelled higher unemployment as we head to the end of the year. On the other hand, this represents data from the “modernised” approach to measuring unemployment, as I discussed last month, and the numbers are likely to wonder around in the months ahead, so let’s not get too carried away!

Truth is, we can make little of these numbers, though the next few months of inflation data are going to remain elevated, because oil prices haven’t come down yet as the Middle East conflict continues and the state government budgets (released so far) contain more spending which will add to inflationary pressures.

The inflation forecasts of Treasury and the RBA are well above the central bank’s 2 per cent to 3 per cent inflation target. Like the RBA, Treasury expects inflation to spread beyond the petrol bowser to the prices of other goods and services. Treasury warns that living standards will go backwards as a result of higher price growth, and says real wages will decline in 2025-26.

Not pretty.

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